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A Proposed Solution to the Problem of Incompetent Real Estate Agents

The Solution: More Training and Formal Apprenticeship

So, at the beginning of the summer I wrote a blog post about whether agents could - or should - be "all things to all people."
My answer:  No. A RESOUNDING "no."  With very limited exceptions.
The blog post was triggered by the release of the D.A.N.G.E.R. Report, a report commissioned by the National Association of Realtors ("NAR") to evaluate the greatest threats facing the real estate profession.  The No. 1 threat, as identified by the consultants?  Unethical and incompetent real estate agents.
Needless to say, real estate agents across the country went wild.  Many thought it was completely unacceptable for "THEIR professional association" to commission, and then publish, a report questioning the capabilities of some subset of their members.  Honestly, I was really surprised at the level of animosity and acrimony from many local agents, including agents I know and respect and about whose abilities I have no concerns.  
To me, it was just an "emperor has no clothes" moment.  I don't think anything in the report was shocking, or even remotely surprising.  I just felt - and still feel - like NAR was FINALLY calling a spade a spade.  And to me, this sort of frank evaluation of the profession, warts and all, is absolutely necessary if we are going to win back the trust and respect of American consumers, who generally rank us below used car salesmen in terms of trustworthiness.
Now, let me put on my lawyer hat here and make some critical - I think - distinctions.  First, there is a world of difference between "unethical" and "incompetent."  Unethical you can't fix. These are active wrongdoers.  The solution for the unethical:  Throw the bums out.  Sanction them by stripping their real estate licenses and banning them from the profession.  But the incompetent are a different story.  I prefer to think of these folks as passive wrongdoers.  They don't intend to do any harm, they just don't know what the h*ll they are doing.  This  problem of incompetence is a problem I think we as a profession can solve.
My solution:  Higher barriers to entry into the profession.  And mandatory apprenticeship.
What do I mean by higher barriers to entry into the profession?  I think it's a bit shocking that real estate agents are only required to have a high school education or equivalent, to take sixty (60) hours of professional training, to pass a multiple choice test - to which you are given the answers, mind you! - at the end of that training, and to then take a multiple choice professional licensing exam. The requirements for a cosmetologist in the Commonwealth of Virginia:  1,500 hours of training OR a diploma or certificate from an approved training program PLUS six (6) months of training. That is not a typo.  See  18 VAC 41-20-20.  
I am not in any way, shape or form trying to belittle cosmetologists, or suggest that what they do is less important than what real estate agents do.  The example is intended to illustrate how out of whack the training requirements for real estate agents are.  Many cosmetologists cut hair.  Which will grow back.  And their fee might be $200.  And they are required to have 1,500 hours of training.  Real estate agents are handling complicated financial transactions.  They are being paid thousands, sometimes tens of thousands, of dollars, per transaction.  And they need 60 hours of class time, no practical training, and a test.
Let's put aside what the higher barriers to entry into the profession should look like.  I am sure people way smarter than me that think about these things for a living already have ideas on what that additional education requirements should be.  I'm less interested in that than I am in the apprenticeship idea.
In real estate today, the generally accepted model for success is to be an agent that leads a team.  I personally have some concerns about the "traditional" team model, but let us lay those aside for the moment and talk through the licensed people on a real estate team.  
  1. Licensed Assistant:  At the bottom of the pyramid would be the licensed assistant, an administrative person with a real estate salesperson's license. The licensed assistant provides administrative support to the team, such as transaction management, but can also do things that an unlicensed administrative staff person cannot, such as hold open houses, coordinate and be present for inspections, etc.
  2. Buyer Agent:  This is a licensed agent that works exclusively representing buyers. Generally these folks are getting a signficant number of buyer leads from the listing manager(s) and the team leader.  They may also have their own buyers and sellers from their personal "sphere of influence."  Typically buyer agents give the team leader 50% of their commission, and they receive a 25% referral fee for any listings they bring to the team.  Those listings are listed under the team leader's name.
  3. Listing Manager:  This is a licensed agent that works exclusively with listing leads, many or most of which may come from the team leader, but some of which may be their own. Again, the team leader typically receives 50% of the listing side commission for these listing leads.
  4. Team Leader:  This is the top of the pyramid, the head of the real estate team.  His or her primary role is to bring in additional business, and possibly to manage the team.  [NOTE:  In some team structures the "run the team" piece is handled by an Operations Manager, leaving the team leader free to focus solely on generating additional business].
There are often other members of the mega-teams, including operations managers, marketing assistants, transaction coordinators, etc.  But listed above are the "typical" licensee roles, from the bottom of the pyramid to the top.
My solution:  Every new agent must do X months - years? - of apprenticeship on a team or with an experienced agent.
I don't know how long the apprenticeship period should be.  I would think a minimum of one (1) year is a good starting point.  And you don't have to start at the bottom of that pyramid and work your way up from licensed assistant to buyer agent to listing manager.   In some circumstances, perhaps the trajectory is that linear.  I think what a baby agent is doing as an apprentice can be flexible.  The goal is to get new agents experience with how real estate works in the real world.  They need to see and understand all aspects of the transaction, from the perspectives of both the buyer and the seller.  Once they have mastered these basics, and successfully completed their ____ months/years of on-the-job training, then, and ONLY THEN, can they have their own independent clients.
I know this is a broad strokes outline, and I am going to drill down into more specifics of how this could work, who would pay for it, why this is a viable solution to the issue of incompetent agents.  But this post has already gotten pretty daggone long, so I am going to call it quits for the moment.  More to come soon on what an apprenticeship program might look like.
As always, your thoughts, comments, and feedback are welcome.

- Melissa

(804) 986-3993

Twitter:  @mikemelissarva
Instagram:  mikemelissarva
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